Incoterms Picker

Answer three questions to get an Incoterm recommendation, plus the full risk and cost split for all 11 Incoterms 2020 rules.

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Suggested Incoterm

FCA – Free Carrier

You hand the goods to the buyer's carrier, cleared for export, and your job is done. It's simpler and safer than EXW, because you keep responsibility for loading and export clearance, which you're better placed to handle than the buyer.

This is a starting point based on Incoterms® 2020, not legal or customs advice. The right term also depends on your negotiating position, insurance needs and the specific goods: confirm the final choice with your freight forwarder or customs broker before you put it in a contract.

Breakdown

EXW — Ex Works (Any mode): Buyer arranges everything from the seller's door, including export clearance, main carriage, insurance and import duty.
FCA — Free Carrier (Any mode): Seller delivers to the buyer's carrier, cleared for export. Buyer arranges main carriage, insurance and import duty.
CPT — Carriage Paid To (Any mode): Seller pays freight to the named destination; risk passes once the goods reach the first carrier. Buyer arranges insurance and import duty.
CIP — Carriage and Insurance Paid To (Any mode): Seller pays freight and insurance to the named destination; risk passes at the first carrier. Buyer handles import duty.
DAP — Delivered at Place (Any mode): Seller delivers, ready to unload, at the named place. Buyer handles import clearance and duty.
DPU — Delivered at Place Unloaded (Any mode): Seller delivers and unloads at the named place. Buyer handles import clearance and duty.
DDP — Delivered Duty Paid (Any mode): Seller delivers, import cleared and duty paid, ready to unload. Buyer pays nothing more.
FAS — Free Alongside Ship (Sea or inland waterway): Seller delivers alongside the vessel. Buyer arranges loading, main carriage, insurance and import duty.
FOB — Free on Board (Sea or inland waterway): Seller delivers on board the vessel; risk passes there. Buyer arranges main carriage, insurance and import duty.
CFR — Cost and Freight (Sea or inland waterway): Seller pays freight to the named port; risk passes once the goods are on board. Buyer arranges insurance and duty.
CIF — Cost, Insurance and Freight (Sea or inland waterway): Seller pays freight and insurance to the named port; risk passes once on board. Buyer handles import duty.

What an Incoterm actually decides

An Incoterm doesn't decide who owns the goods or who's liable for a defect. It decides three practical things: who arranges and pays for freight and insurance, where risk passes from seller to buyer, and who clears and pays import duty. Getting it wrong is a common source of unplanned freight bills and customs delays.

Seven of the 11 rules work for any transport mode. Four (FAS, FOB, CFR, CIF) only work for sea or inland waterway, because they're defined around a vessel and a port.

The 11 Incoterms® 2020 rules

Rule	Mode	Seller arranges freight?	Risk transfers	Who pays import duty
EXW	Any	No	At seller's door	Buyer
FCA	Any	No (hands off to buyer's carrier)	At the named point	Buyer
CPT	Any	Yes (freight only)	At the first carrier	Buyer
CIP	Any	Yes (freight + insurance)	At the first carrier	Buyer
DAP	Any	Yes, to destination	At destination, before unloading	Buyer
DPU	Any	Yes, to destination	At destination, after unloading	Buyer
DDP	Any	Yes, to destination	At destination, before unloading	Seller
FAS	Sea	No	Alongside the vessel	Buyer
FOB	Sea	No	On board the vessel	Buyer
CFR	Sea	Yes (freight only)	On board the vessel	Buyer
CIF	Sea	Yes (freight + insurance)	On board the vessel	Buyer

Common mistakes

Using FOB for an air shipment. FOB is a sea/waterway term. Use FCA for the same idea (buyer arranges main carriage) on any mode.
Quoting EXW for an inexperienced buyer. EXW puts export clearance on the buyer, which many first-time importers aren't set up to handle. FCA is often the better default.
Assuming DDP means "nothing else to pay." DDP puts duty and import clearance on the seller, but destination charges like a port congestion fee can still be negotiated separately in the contract.

Questions people ask

What's the difference between FOB and FCA?

Both hand off responsibility to the buyer early, but FOB only works for sea and inland waterway shipping, with risk passing once goods are on board. FCA works for any transport mode, with risk passing at an agreed point.

Is DDP or DAP better for ecommerce?

DDP gives the buyer one clear price with nothing more to pay, which usually converts better, but it needs the seller to handle or arrange duty and import tax. See the DDP vs DAP calculator for the numbers.

Which Incoterm is cheapest for a small importer?

None is inherently cheapest: each shifts cost from one side to the other. A small importer buying occasionally often prefers FOB or FCA to control freight cost, or DDP to avoid customs paperwork entirely.

Do Incoterms cover payment terms?

No. Incoterms only cover delivery, risk and who arranges transport and customs. Payment terms (deposit, letter of credit, net 30) are agreed separately in the sales contract.

What replaced DAT in Incoterms 2020?

DPU (Delivered at Place Unloaded). It works the same way as the old DAT but can be used at any named place, not only a terminal.

Last reviewed 30 September 2026.

Sources: ICC: Incoterms® 2020 rules